Africa’s Recent Economic Gains: Who is Benefiting?

africa2Africa is rising. According to a World Bank report released this week, the continent is enjoying a natural resources boom and increasing foreign investment (particularly from China, India, and Brazil). It is also benefiting from a surge in tourism, remittances worth $33 billion/year, and strong government investment in key sectors.

These factors have translated into growth rates of 4.9% for Sub-Saharan Africa in 2013. Almost “a third of countries in the region are growing at 6% and more, and African countries are now routinely among the fastest-growing countries in the world”. Such rates are expected to rise further in coming years, to 5.3% in 2014 and 5.5% in 2015.

But not all Africans are benefiting from the continent’s mounting wealth. Staggering inequality has contributed to “unacceptably slow” poverty reduction in Africa. In fact, almost half of all Africans still live in extreme poverty (defined as an income of $1.25 or less per day).

Of further concern, “sustaining Africa’s strong growth over the longer term while significantly reducing poverty and strengthening people’s resilience to adversity may prove difficult”. The continent faces great environment risks (including droughts and floods) and the threat of conflict (as in Mali and the Central African Republic). Moreover, the continent’s dependence on a few commodities (oil, metals, and minerals) leaves it vulnerable to fluctuations in global prices.

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So what does this mean for poverty reduction in Africa? Will it be possible to achieve the World Bank and UN goal to eradicate extreme poverty within a generation? In the words of a UN working group, the goal is “ambitious but feasible”. However, as economist Jeffrey Sachs notes, it “can’t be achieved by free markets alone”. It will require continued government investment, sound public policy, and international aid.

To do your part, please support our Op4G partners: Develop Africa, African Soup, and Plant a Seed Africa.

Flickr photo credit: calips96

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